2020 | Transportation

Companies overseeing Purple Line construction say they might end partnership with state

Notice of termination filed Tuesday

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This story was updated at 3:00 p.m. on June 24, 2020, to include comments from a Maryland Department of Transportation spokeswoman.

The future of the $2 billion Purple Line project became more complicated after the companies overseeing the project said they will end a public-private partnership with the state if a dispute over cost overruns and extended delays isn’t settled.

In a notice of termination sent to the Maryland Transit Administration (MTA) on Tuesday, Peter van der Waart, CEO and project manager of the Purple Line Transit Partners (PLTP), wrote that the partnership for constructing the 15-mile light rail line would be terminated within 60 days without a new agreement.

The Purple Line is planned to extend from Bethesda to New Carrollton in Prince George’s County. It’s expected to connect several Metrorail lines in Bethesda, Silver Spring, College Park and New Carrollton.

van der Waart wrote that the consortium is encouraged by recent discussions to resolve issues, but still wants a settlement within the 60-day time frame. The companies — Fluor, Meridiam and Star America — also can meet with the state to discuss transferring the project, he wrote.

The notice comes nearly two months after the project’s contractor companies, partnered under Purple Line Transit Constructors (PLTC), said they would leave the job because of the delays and no cost relief.

On May 1, PLTC said it would leave within the next 60 to 90 days. If the total delays for the project reach 365 days, the companies’ contract has an exit clause that would allow them to leave the project, they said.

The companies under PLTC are Fluor, Lane Construction and Traylor Bros.

In van der Waart’s letter to the state, he wrote that the project has resulted in 365 or more days of “critical path delay.”

In an statement on Wednesday, Erin Henson, a spokeswoman for the Maryland Department of Transportation, wrote that despite “substantive settlement offers” made by the department, PLTP has not proposed “reasonable settlement terms.”

“Further, MDOT disputes PLTP’s right to file a notification of termination, and consider this action a default,” she wrote. “We intend to vigorously protect the interests of the citizens of Maryland and pursue all legal options available to the state.”

The state is evaluating other project delivery methods but is looking forward to “continuing discussions,” Henson wrote.

Scott Risley, project manager for the PLTC, wrote in a May 1 letter to PLTP that the contractors have tried to work with the MTA for almost three years to resolve the disputes. Four claims of more than two and a half years of delays and overrun costs were made in the letter.

After six months of “intense negotiations, Risley wrote, an agreement was made for settlements on certain issues in December, but MTA refused to move forward with the negotiated deal. It instead proposed a revised deal that added disputed issues and placed additional cost and risk to the firms, he wrote.

“PLTC and its member companies should not be required to finance the hundreds of millions of dollars in added costs for issues that are out of its control, not of its making….,” he wrote.

In a statement sent on May 1, the state transportation department wrote that the project has experienced delays “in conjunction with litigation” since the project started in 2016.

The partners “have been actively engaged in discussions to mitigate the impacts of litigation and change order requests on both the project schedule and cost,” the department wrote.

On May 22, state officials told the Montgomery County Council that they were still in negotiations with the Purple Line contractors to keep them on the job. About 30% of the construction had been completed at the time.

They acknowledged that the total claims being negotiated are about $519 million.

Greg Slater, secretary of the state Transportation Department, told the council that he has had “productive” conversations with the involved parties and that Gov. Larry Hogan was monitoring and checking in on the negotiations. State officials have considered a “variety of scenarios” if the contractors walk off the job, he said.

“I’m personally committed to finding a mutually agreeable outcome,” Slater told the council. “It’s important that whatever we agree on is in the best interest of the state and its taxpayers — short term and long term. At this point, I can’t really talk about the intentions of the PLTC and where they are.”

Spokespeople for PLTP and PLTC could not be reached Wednesday morning.

The line is expected to open in phases. The first will open six stations, starting at New Carrollton in 2022. The second phase would bring full service to Montgomery County by opening the remaining 15 stations in 2023.

Montgomery County has contributed and committed about $223 million to help the state build the line and to fund supporting projects.

Briana Adhikusuma can be reached at briana.adhikusuma@bethesdamagazine.com.